Boycott Watch
March 30, 2004
Frivolous antitrust lawsuit filed against a boycotter
The case should be summarily dismissed
Is the plaintiff actually doing what they falsely accuse others of?
   Summary: Summary: On March 2, 2004 a law suit was filed in the United States District Court's Southern District Court in Indianapolis, Indiana citing that an organization of promotional goods distributors is boycotting a promotional goods manufacturer in violation of US Antitrust laws. Boycott Watch believes that the boycott is 100% legal and the law suit is frivolous with the possible intention of stifling free speech and dissolving a trade association which in and of itself may constitute restraint of trade.
   The promotional products industry is comprised of suppliers and distributors. The suppliers are the wholesalers who manufacture items such as custom printed coffee mugs, pens, mouse pads, calendars and other items business use to keep their name in front of their clients. Distributors sell these custom products to businesses and usually represent the product lines of many suppliers, thus offering businesses a wide variety of items to choose from at different price levels. Since there are millions of items available for custom printing, no supplier can manufacture everything and therefore each distributor promotes various lines they feel can best benefit their clients.

   The promotional products industry has trade associations which promote the overall needs of their members. One organization, Advertising Specialty Institute, is an industry supplier of compiled information, catalogs, trade shows and products that suppliers and distributors may use in their business. Most promotional products suppliers publish their ASI number on the bottom of their ad flyers and catalogs to help their distributors sell their products without openly identifying their sources to the end purchaser, but each ASI number points to a supplier so the distributor can easily identify their sources. This also allows the distributors to put their own names on the catalogs to protect the distributor who is a vital link in the sales flow. It is the distributor who makes the direct contacts and sales, and even builds a personal relationship with the client. If you have seen such catalogs, you may have noticed the letter codes in brackets next to each product. These ASI codes tell the distributor what their profit margin is for selling the goods at list prices. Distributors do not usually discount the list prices, but they can use the letter code as their guide.

   One industry association, the National Association of Promotional Products Distributors ( is comprised of distributors only. Suppliers and distributors can join the ASI, but suppliers can not join the NAPPD. Qualified suppliers can, however, become members of the NAPPD advisory panel. The NAPPD is primarily concerned that the traditional relationships between suppliers and distributors are maintained since that relationship is the bread and butter of their members. If suppliers start to sell directly to the customers, distributors will be driven out of business which the NAPPD naturally wants to prevent.

   The NAPPD maintains a membership and their web site lists suppliers that have signed a pledge to only sell to distributors as well as a list of distributors who have "violated our trust," meaning companies that the NAPPD believe is selling to non-distributors, thus hurting the ability of their members to make a living. At the end of the list of companies that sell to non-distributors, the NAPPD writes "The association can not tell you who to buy from anymore than it can tell these suppliers who to sell to, but why would you support a supplier who has chosen not to support you?" This suggests the recommendation of boycotting companies on that list, but does not order their members to boycott nor does it place a condition of membership upon agreeing to boycott.

   One supplier on the list of companies to boycott is Norwood Promotional Products, which has taken exception to the list and filed an antitrust law suit in Federal Court alleging that the NAPPD, its members and even non-members are conducting an illegal boycott and is injuring Norwood by restraint of trade. Boycott Watch has reviewed the filing and believes the lawsuit is frivolous and may just be harassment to either get their name off the NAPPD list or possibly put the NAPPD out of business, which may in and of itself constitute restraint of trade.

Boycotts and the law:

   There are two types of illegal boycotts in the United States. First, persons in the United States may not join into a foreign government sanctioned boycott of a nation that is friendly to the United States. This is primarily aimed at preventing people from participating in the Arab boycott of Israel since such activity would create de-facto US foreign policy, which Congress reaffirmed as their domain when passing that law. Second, unions may not boycott companies in order to force them to accept a union, thus preventing intimidation of business owners by unions.

Boycott Watch findings:

   In the Norwood case, no condition of illegal boycott exists. This is not a case of the Arab boycott of Israel nor is there union membership at issue. Norwood is suing for antitrust law violations citing a boycott as the reasons for the antitrust violations in a lawsuit with three counts: 1) violation of federal antitrust laws, 2) violation of Indiana antitrust laws, and 3) tortuous interference with business relationships and prospective economic advantage.

   In the lawsuit, Norwood cites a completely legal boycott effort as being illegal and their distributor/customers unwillingness to buy from Norwood because Norwood took action to undercut the distributors by selling directly to the end customers. According to the NAPPD, Norwood wants to sell to the end customers and still sell to the distributors, and now Norwood is upset that distributors won't buy from Norwood if Norwood undercuts them by selling directly to the end customers. Boycott Watch believes that nobody should be forced to buy from any company working against ones own interests. That would be like suing the Catholic Church to cover the cost of abortion in its health insurance, something the Catholic Church is religiously against.

   The law suit quotes alleged comments in an email list conversation, which the law suit called a chat room, detailing dissatisfaction among Norwood customers. Legally, these comments are pure hearsay. First, it was a private email list, not a chat room thus the allegation is flawed. Second, the comments are third party quotes, and third, nobody can not prove that those who typed the comments in, if the quotes are even accurate, actually came from the people claimed to be making the comments. The email list being quoted is not sponsored by the NAPPD, and list members may or may not be members of the NAPPD, yet the lawsuit gives the impression that the chat room, they term it, was among NAPPD members only.

   The quotes in the lawsuit are the opinions of the individual writers and are completely within their constitutional right of freedom of speech. None of the quotes come close to saying anything that would constitute antitrust; rather the quotes discuss a legal boycott. Most interesting, the quote attributed to NAPPD President Clyde Straub starts with a quote that is also on the NAPPD web site "I wouldn't dream of telling a supplier who to sell to…" yet Norwood is suing Straub, the NAPPD and various distributors for telling Norwood who to sell to, thus Norwood is weakening its own case.

   There is nothing illegal about boycotting a company who you do not feel is working in your best interests, nor are chat room conversations about your dissatisfaction illegal. There is also nothing wrong with an association having requirements for an approved vendor or supplier list. Unions, for example, have posted lists of companies they boycott and recommend, and this is no different. The Good-Housekeeping Seal of Approval has existed for many years recommending products to buy, and animal rights groups have recommended stores not to buy from in the form of boycotts. There is no difference here.

   Antitrust would exist, for example, is someone tells every gas station down a street not to buy a certain product or from a certain supplier as a condition. That is not the case here. The NAPPD asks the question "why would you support a supplier who has chosen not to support you?" but does not tell its members that they must boycott in order to be a member of the NAPPD nor does the NAPPD demand boycott with repercussions for not boycotting, so this case does not fit the criteria of antitrust. Promotional products distributors, not all of whom are members of the NAPPD, are engaged in a perfectly legal boycott effort which negates count 1 and count 2 of the lawsuit. The third count relies on the first two counts to be valid for it to be valid, and the first two counts are not valid legal claims. Count three, therefore, is also invalid.

   Norwood is requesting a jury trial, damages from the boycott against them citing loss of revenue due to the boycott and punitive damages. Boycott Watch expects the case to be thrown out of court in a motion the defendants are sure to file immediately. Boycott Watch believes that Norwood's attorney should have reviewed the law in more detail before filing their lawsuit.

   Boycott Watch believes that Norwood made another mistake in fighting their customers by suing them for not buying from them. Not only is that poor customer service, but it will also scare off future potential and possibly existing customers. People do not like buying from companies that may potentially sue them or companies that have a history of suing clients or service providers. Norwood, therefore, may have caused harm to their own future sales by filing their lawsuit rather than either trying to resolve the situation with their customers or just ignoring it.

   Boycott Watch is staffed by writers, not lawyers. We are a news service. We do not profess or pretend to give legal advice in any way shape or form, but we do know that basics of the law, and we can not see any basis for the Norwood lawsuit. No illegal boycott exists here and the lawsuit for antitrust quotes a recommendation for boycotts as its antitrust basis and no demands, therefore no antitrust violations. The attorneys filing this case must know this as it is basic law, and therefore Boycott Watch believes the Norwood lawsuit was filed to intimidate the NAPPD.

   Boycott Watch asks you: Would you buy groceries from a store that sued your neighbor because your neighbor didn't buy food there anymore? That's what Norwood is doing - suing their customers. We wonder how long Norwood can stay in business with that attitude.
Click Here to download the filing  (570K PDF)

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